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Vanegas v. American Energy Services

A company allegedly promised to pay any remaining original employees five percent of the proceeds when the company was sold. The seven remaining employees accepted the offer by staying with the company until the sale. Regardless of whether the promise was illusory at the time it was made, the promise became enforceable upon the employees' performance. Texas Supreme Court, No. 07-0520, 12-18-2009

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Argued October 15, 2008

JUSTICE GREEN

In this case, we are asked to decide the enforceability of an employer’s alleged promise to pay five percent of the proceeds of a sale or merger of the company to employees who are still employed at the time of the sale or merger. The employer, American Energy Services (AES), argues that because these were at-will employees, any promise was illusory and therefore not enforceable-the company could have avoided the promise by firing the employees at any time. The employees respond that the promise represented a unilateral contract, and by staying on with the company until AES Acquisition, Inc. acquired AES several years later, they performed on the contract, making it enforceable. We agree with the employees; continuing their employment with the company until it was sold would constitute performance under such a unilateral contract, making the promise enforceable, regardless of whether that promise may have been considered illusory at the time it was made. We therefore reverse the court of appeals’ judgment and remand the case to the trial court to consider the merits.

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